A Framework for Delivery Network Optimization

September 10, 2012 (RARC-WP-12-015)

The U.S. Postal Service’s delivery network touches nearly every household, six days a week. More than 252,000 carrier routes operate out of 23,000 delivery facilities. Over time, the facility space needs of the Postal Service’s delivery network have changed. Letter and flat mail volumes have declined, and more mail is sorted by machines rather than carriers into delivery order. Carriers now spend less time in the office manually sorting mail and more time delivering mail on the streets. As a result, the Postal Service has been able to consolidate the number of carrier routes, reducing the need for carrier space in facilities. On average, the current network has more than twice the facility space per carrier than recommended by the Postal Service’s efficiency standards. This extra space represents a significant opportunity for resource savings through a concerted consolidation effort.

The paper A Framework for Delivery Network Optimization demonstrates how operations research methods can be used to rationalize the facility space for delivery operations. The analytical model examines consolidation opportunities within the existing carrier facility footprint, while balancing the need for space that is near delivery routes against facility and labor costs. The results of the analysis show that a much smaller network of 13,917 delivery units — 9,835 fewer than at present — is sufficient to meet existing delivery needs. This new optimized network would reduce Postal Service costs by $1.0 billion per year.

As the Postal Service plans for the delivery network needs of the future, modeling tools like this one can be powerful aids for assessing new network designs. To read more about this analytical model, download the full report below.